The concept of an HRA is pretty simple, but it’s still a relatively new alternative to traditional group coverage, so it’s likely that employees will have questions. A health reimbursement arrangement allows an employer to reimburse for medical expenses and/or insurance premiums on a tax-free basis. The purpose is for employers to help their employees afford rising healthcare costs. Here are 10 things to know about what to expect with an HRA.
Types of HRAs
There are several types of HRAs that allow business owners to offer benefits to their team, but these are the main two you’ll probably hear about and/or be offered. For the purposes of this blog, we'll focus on these two:
- ICHRA- the individual coverage health reimbursement arrangement allows for tax-free reimbursement of benefits for any size business and for any amount.
- QSEHRA- the qualified small employer health reimbursement arrangement is for businesses with less than 50 employees that do not offer a group plan.
10 things to know about what to expect with an HRA
- Get set up by providing proof of coverage. To receive reimbursements through the HRA, you must submit documentation like a monthly bill, an email confirmation, or an ID card.
- Set up recurring premiums. When you upload proof of coverage, a recurring expense will be set up in your account so you can be reimbursed each month for your premium. Take Command Health will present your employer with a report each month and your employer will reimburse you on your paycheck. Note: reimbursements come from your employer, not Take Command.
- Submit receipts. If your employer chooses an HRA which allows for eligible medical expenses, here’s a pretty comprehensive list of what qualifies. Your employer might also reimburse for health insurance premiums only.
- What happens if you submit a receipt that's more than your monthly allowance? If you submit a receipt that is more than your monthly allowance, it will be reimbursed throughout the year.
- What happens to leftover funds, if you leave the company? HRA funds stay with your employer, but your health plan will stay with you, helping you avoid costly COBRA or lapses in coverage.
- What insurance plans are compatible? To receive reimbursements through the HRA, you must have HSA-compatible health insurance that qualifies as Minimum Essential Coverage (MEC). Most plans today meet MEC requirements, such as major medical plans purchased from Healthcare.gov, Medicare (A or C), and more. Plans that do not qualify include: critical illness, indemnity, short-term plans, vision or dental only, and plans that only offer discounts on medical services.
- Can my spouse's group insurance be reimbursed? With ICHRA, the rules do not allow for employees to consider getting on their spouse’s group plan (if offered by the spouse’s employer). However, a QSEHRA works great with employees on their spouse’s group plan.
- Do I get a premium tax credit (PTC) with my HRA? Your HRA will offset your tax credits dollar for dollar if you have a QSEHRA. With an ICHRA, it comes down to the affordability of the HRA. The Take Command Health team will help you determine how this will work for your specific case, calculate your PTCs, and weigh your options.
- No pre-funding or adding to an HRA. Your HRA is solely funded by your employer, meaning you can’t add funds to it like you would an HSA.
- Keep your doctor in network. HRAs bring flexibility that allows employees to choose the plan and the doctors that work for them. But what if you can’t find your doctor in-network? These tips should help!
Still have questions about what to expect with an HRA?
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A wife to one and mother to four, Keely does all of the things. She’s also dabbled in personal finance blogging and social media management, contributed to MetroFamily magazine, and is passionate about good food, treasure hunting and upcycling. With a B.S. in Psychology from the University of Oklahoma and a knack for a witty punchline, it’s no surprise that Keely’s social posts are as clever as they get. In her (very little) free time, you’ll find Keely with her nose in a book or trying out a local restaurant with her family.